Latest news with #SingaporeOvernightRateAverage
Business Times
a day ago
- Business
- Business Times
DBS, OCBC, UOB Q2 results likely to be weighed down by lower interest rates
[SINGAPORE] The trio of local banks will likely post weaker results for the second quarter of 2025, weighed down by lower net interest income from falling interest rates, analysts said. They are expected to post their Q2 financials next month, beginning with OCBC on Aug 1 and followed by DBS and UOB on Aug 7. Net interest margins (NIMs) will probably be 'materially lower' in Q2, said Thilan Wickramasinghe, head of research and regional financials at Maybank Securities Singapore. He noted that the Singapore Overnight Rate Average (Sora) was down 50 basis points – due to 'massive' domestic liquidity, partly because of safe haven inflows – while the Hong Kong Interbank Offered Rate (Hibor) was at its lowest since 2022. The Sora decline provided only partial relief in funding costs, as banks 'weigh off preserving market share', he said. DBS Group Research analyst Lim Rui Wen also expects NIMs to fall quarter on quarter by a high single digit, due to the lower Sora and Hibor. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The rates' impact will likely be more pronounced as more loans get repriced against reduced benchmark rates throughout Q2, she added. However, she noted that OCBC's and UOB's repricing of their fixed-deposit and flagship deposit account interest rates should buffer falling asset yields in subsequent quarters. Wickramasinghe also pointed out that loan growth was better than expected in Q2, probably due to front-loading demand ahead of the expiry of US President Donald Trump's tariff moratorium. While this may partially offset downsides in net interest income, it is unlikely to arrest sequential decline, the researcher said. Trump impact Analysts also said that Trump's 'Liberation Day' tariffs in April likely weighed on market sentiment, impacting wealth management fees in turn. Tay Wee Kuang, an analyst at CGS International, said that macroeconomic uncertainty could continue to dampen fee income in the second half of the year, despite equity market sentiment having slowly recovered. Nevertheless, Lim of DBS expects wealth management income to remain a tailwind for Singapore banks in the medium term, as wealth management activity began recovering in May. This is also supported by ongoing growth in assets under management (AUM), she said. 'The investible portion of AUM is expected, as clients reallocated funds from fixed-deposit rates and (treasury-bill) rates, which continue to see declining rates through Q2.' Wickramasinghe likewise expects sequential improvements in wealth management fees, given falling domestic benchmark rates and risk-on market conditions. He added that significant volatility around foreign exchange, trade and interest rates would likely have supported trading income in Q2, which could surprise on the upside, especially for DBS and UOB. Higher credit costs Meanwhile, the three banks' credit costs could trend towards the higher end of their respective 2025 guidance, due to weakness across Asean economies such as Thailand and Indonesia , said Tay. 'However, we do not expect total credit costs to change drastically quarter on quarter, as we believe the pre-emptive general provisions recognised by the Singapore banks in Q1 should remain sufficient amid the current credit cycle,' he added. Ongoing reviews of second-order impacts from the US tariffs may also lead the banks to maintain or increase their general provision buffers, said Lim. Therefore, general provisions write-backs are unlikely this year, she noted. CGS International and Maybank Securities kept their 'neutral' call on the Singapore banking sector, with Tay noting that the lenders lack growth catalysts in an uncertain economic outlook. The analysts expect UOB to restore its guidance for 2025, which it had suspended in Q1. They are also awaiting more clarity from OCBC on its strategy, following its failed bid to privatise its insurance arm, Great Eastern . Clarity around returns may also take longer to resolve due to the lender's 'unexpected leadership change ', Wickramasinghe said. But Lim, who has 'hold' calls on OCBC and UOB, expects the banks' dividend yields of up to 6.5 per cent to continue supporting share prices. 'As asset quality remains largely benign, and dividend yields stay attractive, comparable to Singapore real estate investment trusts, we expect share prices to remain well-supported in a low interest-rate environment and due to the safe haven appeal of the Singapore dollar,' she said.
Business Times
3 days ago
- Business
- Business Times
S-Reits earnings season kicks off, with 37 trusts scheduled to report their results in coming weeks
THE latest earnings season for Singapore-listed real estate investment trusts (S-Reits) has commenced, with seven trusts reporting their latest financial results or business updates last week. Another 30 S-Reits have also announced that their latest earnings will be scheduled for release between Jul 28 and Aug 14. Among the 37 S-Reits, 31 are reporting quarterly or half-year financial results, four will provide quarterly business updates, and two will provide full-year financial results. Sabana Industrial Reit , Digital Core Reit , Mapletree Logistics Trust (MLT) and OUE Reit kicked off the current earnings season last Wednesday (Jul 23), followed by Suntec Reit and Frasers Centrepoint Trust (FCT) on Thursday (Jul 24), as well as Keppel DC Reit on Friday. Of the Reits that have announced their earnings so far, most have reported stable operating performances, with some improvements in distributions per unit (DPU) observed in the latest reporting period. Reit managers, however, remain watchful over the impact of trade tensions and tariffs going forward and are focused on portfolio and capital management efforts while eyeing opportunities. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up Sabana Reit's DPU rose 26.9 per cent year on year to S$0.017 in H1 2025, on the back of higher gross revenue and net property income (NPI). The manager said that the strong performance was supported by improved occupancy at certain properties and positive rental reversions across the portfolio. However, it noted that rising geopolitical tensions, the uncertain trade outlook, and cost pressures are headwinds, and its priority is to optimise portfolio occupancy rate while mitigating operational costs to attract and retain cost conscious tenants. Elsewhere, Digital Core Reit reported stable DPU of US$0.018 in the first half of 2025, amid higher gross revenue and NPI. The Reit manager noted that data centre fundamentals continue to tighten across core global markets, and it remains focused on capitalising on the favourable industry backdrop to create durable value for unitholders. In the first half of 2025, Digital Core Reit repurchased a total of 1.8 million units at an average price of US$0.565, generating DPU accretion of approximately 0.1 per cent. The units were held as treasury units and were subsequently cancelled. OUE Reit reported a 5.4 per cent improvement in DPU for the first half of 2025, following a significant decline in finance costs, which fell 17.3 per cent on year. The Reit's revenue and NPI fell slightly during the period on a like-for-like basis as its resilient Singapore commercial portfolio partially offset lower hospitality contributions. OUE Reit's manager noted that its disciplined capital management, coupled with the decline in the Singapore Overnight Rate Average (Sora), has enabled the lower financing costs, supporting DPU growth. Other S-Reits with Singapore assets have also noted improvements in their financing costs. Suntec Reit reported a 3.7 per cent improvement in DPU for H1, with its Singapore office, retail and convention portfolios continuing to deliver strong operating performances. The manager also noted that financing costs for Suntec Reit declined amid refinancing efforts, as well as the paring down of debt with divestment proceeds from Suntec strata office units. Similarly, FCT said that its cost of debt was improving, declining to 3.7 per cent in Q3 2025, down from 4.1 per cent a year earlier. The Reit's committed occupancy remained stable and high, at 99.9 per cent, with shopper traffic and tenants' sales improving 2.1 per cent and 4.4 per cent respectively, compared to the prior-year period. Its manager also noted that limited supply and healthy demand continue to underpin the Singapore suburban retail market. Elsewhere, MLT reported stable operating metrics with 95.7 per cent occupancy and 2.1 per cent positive rental reversions. Revenue and NPI fell 2.4 per cent and 2.1 per cent, respectively, on year, mainly due to foreign exchange impact and loss of contribution from 12 divested properties. On a constant currency basis, the portfolio's operational performance was stable. Excluding divestment gains, DPU from operations rose 0.5 per cent quarter on quarter, reflecting stable operational performance. However, its DPU was lower year on year, amid weaker regional currencies and the absence of a one-off divestment gain. SGX RESEARCH The writer is a research analyst at SGX. For more research and information on Singapore's Reit sector, visit for the monthly S-Reits & Property Trusts Chartbook.
Business Times
5 days ago
- Business
- Business Times
JPMorgan raises STI target, upgrades real estate sector
[SINGAPORE] Analysts from JPMorgan raised their target on the Straits Times Index (STI), with a higher base and bull target of 4,500 and 5,000, respectively. They also reiterated that Singapore's equities market is their No 1 'overweight' market in South-east Asia. This comes on the back of interest rate declines, positive tariff news flows, and progress of the city-state's S$5 billion equity market development programme (EQDP), which has driven the STI up by 6 per cent in the month to date, surpassing the analysts' initial expectations. The STI was 0.5 per cent or 21.03 points down at 4,252.02 as at 12.14 pm on Friday (Jul 25). Across the broader market, gainers outnumbered losers 254 to 226, with 1.2 billion securities valued at S$851 million changing hands. The EQDP, in particular, is noted to benefit small and mid-cap stocks on the local bourse, in light of the Monetary Authority of Singapore's (MAS) placement of the first S$1.1 billion for three fund managers, and its commitment of S$50 million till end-2028 to strengthen equity research and listing support. 'We reiterate our view, however, that significant outperformance of small and mid caps as compared to large caps is unlikely, due to higher multiples, uncertain profitability, and lower liquidity and growth potential of the group,' they wrote in their Wednesday (Jul 23) report. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up 'Still, small and mid-cap stocks with a good track record of growth and quality balance sheets would likely be the centre of attention in Q3 and Q4 due to the influx of capital, and as funds begin allocations and research coverage picks up.' In the report, they also stressed that the Singapore dollar is a safe-haven currency as the US dollar weakens. 'Despite sharp outperformance year to date (YTD), Singapore equities still offer one of the best combinations of yield, currency strength, and potential inflows among Asean markets, in our view,' they said. In addition, Singapore rates have continued to trend downwards with the Singapore Overnight Rate Average (Sora) dropping by another 44 basis points to below 1.3 per cent, since the analysts' previous report in June. 'At our base-case target level, STI's forward dividend yield is around three percentage points higher than the risk-free rate (for six-month Treasury bills) and still one of the highest yields among developed markets,' they said. The latest six-month Treasury bill cut-off yield fell to 1.79 per cent, based on auction results released by MAS on Jul 17. This is the ninth consecutive issuance since Mar 26 for which yields have declined. Strong on real estate sector The analysts specifically upgraded Singapore's real estate to an 'overweight' rating from 'neutral' previously, as they shift their asset allocation to focus on rate beneficiaries in the real estate sector. They were also 'overweight' on the consumer staples sector in Singapore, and strong on counters such as Thai Beverage . The cost of debt guidance was reduced in the Q1 FY2025 results season on the back of a drop in Sora and the Singapore yield curve. 'With the recent drop in Sora, we expect guidance to be lowered further with Singapore-focused real estate investment trusts (Reits) holding a greater proportion of Singapore dollar debt,' wrote the analysts. Several of their top picks for Singapore were Reits such as CapitaLand Ascendas Reit , CapitaLand Integrated Commercial Trust , Frasers Centrepoint Trust and Keppel DC Reit . They were also 'overweight' on property conglomerate City Developments Limited . On the flipside, the analysts are becoming more selective in industrial sectors following strong YTD performance of certain counters, preferring defence and airline plays. It was 'overweight' on ST Engineering and Singapore Airlines . However, they had an 'underweight' rating on shipbuilding and marine engineering player Yangzijiang Shipbuilding , considering rulings on port fees for China-built vessels that will kick in on Oct 14, which will likely negatively affect the company.
Straits Times
7 days ago
- Business
- Straits Times
Local buyers are key to recovery of prime district condo market
Find out what's new on ST website and app. The strong weekend showing also comes after two years of tepid sales of new prime district condos, which plummeted to a record low of 46 units sold in the second quarter of 2025. SINGAPORE – When Malaysia's IOI Properties began pre-sales for its 683-unit, 99-year leasehold condo W Residences Marina View in Singapore's Central Business District on July 13, only two units were reportedly booked. It was a sign of how foreign buyers, deterred by hefty taxes on their property purchases, were still giving the luxury housing segment a miss. But just a week later, two new prime district condos, UpperHouse at Orchard Boulevard and The Robertson Opus in Unity Street – the only 999-year residential project launch in District 9 this year – collectively sold 303 units over their July 19 launch weekend. This is above the 253 new units sold in the third quarter of 2023 after foreign buyers were slapped with a 60 per cent additional buyer's stamp duty (ABSD) in April 2023. The strong weekend showing also comes after two years of tepid sales of new prime district condos, which plummeted to a record low of 46 units sold in the second quarter of 2025, according to PropNex. The dry spell afflicting prime district condos appears to be lifting, with UpperHouse and The Robertson Opus poised to boost prime district transactions to a two-year quarterly high in the third quarter this year. These units have become more appealing as the price gap between prime district condos and those in the city fringe has narrowed substantially. As a result, they offer better value to local buyers, who were primarily behind the weekend's strong showing at the two launches. The gap between the median price per square foot (psf) of new homes in the prime district and city fringe areas has narrowed from a high of 56.5 per cent in 2018 to a mere 1.9 per cent in the first half of 2025, Huttons Asia chief executive Mark Yip noted. Furthermore, the three-month compounded Singapore Overnight Rate Average, or Sora rates, have dipped below 2 per cent in July 2025, lowering borrowing costs, he added. An artist's illustration of The Robertson Opus in Unity Street. PHOTO: FRASERS PROPERTY, SEKISUI HOUSE As a result, more than 93 per cent of new non-landed private homes in the prime district in the first half of the year were bought by Singapore Permanent Residents and Singaporeans. PropNex chief executive Kelvin Fong noted that the average $3,350 psf price transacted at UpperHouse is among the most competitive prices for a luxury condo launch in the prime Orchard Road area. In comparison, the 54-unit freehold Park Nova luxury condo in Tomlinson Road recorded a median price of $4,979 psf when it first launched in May 2021. On a quantum basis, transacted prices of UpperHouse's one-bedders began at nearly $1.4 million, while two-bedders ranged from $2.1 million to $2.7 million. At The Robertson Opus, some 41 per cent of its 348 units were sold on July 20. The units fetched an average price of $3,360 psf. Transacted prices of its one-bedders (495 sq ft) ranged from $1.59 million to $1.67 million, while two-bedders (689 to 721 sq ft) sold for between $2.17 million and $2.63 million, according to PropNex. In comparison, W Residences – which will sit atop the 360-room five-star W Singapore hotel – said it is offering selected units at special preview prices starting from just above $3,20 0 psf. That means prices of the cheapest one-bedroom units (538 sq ft to 570 sq ft) start at above $1.8 million. When asked how it plans to boost demand, IOI Properties said on July 22 that 'interest has been encouraging, with units already reserved or under negotiation'. A spokesman added that further release plans will be evaluated when the preview ends. With several more prime district and centrally located projects expected to be launched in the coming months, developers may become more strategic in their marketing plans and pricing, ERA key executive officer Eugene Lim said. This can be seen in the starting prices for River Green in the prime district of River Valley, and the nearby city fringe condo Promenade Peak at Zion Road. River Green's starting price of $2,846 psf and Promenade Peak's starting price of $2,680 psf appear to be a sweet spot for buyers of centrally located new launches. Both projects, which will launch on Aug 2, saw robust demand during July previews. Two more centrally located condos could begin pre-sales in October: prime district project Skye at Holland, and Zyon Grand at Zion Road, a city fringe project. Whether the rebound in new prime district condo sales can be sustained will depend on the take-up rates of the upcoming prime district and centrally located new launches. Mr Nicholas Mak, chief research officer at said this also hinges on whether prices of the new prime district launches are within 'an acceptable price range' – which appears to be the lower end of the $3,000 psf range for 99 year-leasehold launches, and between $3,250 and $3,500 psf for freehold developments. With the hefty ABSD still in place for residential property purchases by foreign buyers, the only way to keep local buyers interested in prime district properties is to ensure that prices are accessible to them , especially in the face of growing economic uncertainty.
Straits Times
10-07-2025
- Business
- Straits Times
DBS joins UOB and OCBC with green home loan offering
Sign up now: Get ST's newsletters delivered to your inbox DBS said its rate is the most competitive green home loan in the market. SINGAPORE – DBS Bank has followed on the heels of UOB and OCBC Bank to offer green home loans for private property projects. Unlike the offerings from UOB and OCBC, which launched 'eco-mortages' in 2021, the DBS loan option is available only to borrowers with private properties under construction. These projects must have a Green Mark rating from the Building and Construction Authority (BCA) or be earmarked for one, DBS said on July 10. The promotional green home loan rate for a minimum mortgage of $1 million for the first year is pegged to the three-month compounded Singapore Overnight Rate Average, or Sora, plus a spread of 0.25 per cent. The spread is the profit the bank earns. This would mean that the first-year promotional rate for a $1 million mortgage is 2.2278 per cent, given prevailing rates. DBS said its rate is the most competitive green home loan in the market and is lower than the standard mortgage rates for new private residential launches. Mr Calvin Ong, head of the consumer banking group at DBS Singapore, said the competitive rates will hopefully incentivise customers to make environmentally conscious decisions when they buy a home. Mr Ang Kian Seng, group director of environmental sustainability at BCA, added that the DBS initiatives align with the Singapore Green Building Masterplan, which aims to green 80 per cent of buildings – by gross floor area – by 2030. Green Mark-certified buildings provide healthier indoor living environments while reducing energy costs, Mr Ang added. DBS is late to the green loan party, given that UOB and OCBC have been offering such mortgages since 2021. Mr Ong said the bank launched its loan offering once it had built up a robust pipeline of 'green' housing developments. It is financing 10 residential property projects in 2025 that are set to receive a Green Mark certification. These 10 properties make up 40 per cent of all the residential property launches in 2025, Mr Ong added. Home owners are eligible for a UOB green loan if their property is Green Mark certified. Unlike the DBS green home loan, which is only for private properties under construction, the UOB mortgage is available for completed private residential properties, with a minimum loan size of $250,000. The bank is offering a promotional rate of three-month compounded Sora, plus a spread of 0.7 per cent per annum – 0.45 percentage points higher than what DBS is offering. OCBC is the trailblazer in the space. Ms Maryanne Phua, its head of home loans, said the bank was the first to launch green home loans in 2021. Its product differs slightly from that of the other two banks. While DBS and UOB extend green loans for Green Mark-certified buildings, OCBC uses different criteria and requires prospective home owners to pass a BCA assessment. Home owners will be assessed on whether they are taking steps to furnish their home with environmentally friendly features. This can either be through home design, the use of energy-efficient appliances, and smart home features that regulate energy consumption. Ms Phua added that OCBC has promotional packages for both buildings under construction and completed properties. 'We have seen growing interest, and compared with 2021, the take-up of Eco-Care Home Loans increased sevenfold in 2024,' she said.
